The pound trims losses after a four-day sell-off; tests levels past 1.1300. (Pivot Orderbook analysis)

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• The pound trims losses after a four-day sell-off; tests levels past 1.1300.
• A mixed US NFP report send the dollar tumbling.
• GBPUSD is expected to depreciate further in the near-term – UOB.

The pair currently trades last at 1.1284.

The previous day high was 1.1422 while the previous day low was 1.1152. The daily 38.2% Fib levels comes at 1.1255, expected to provide support. Similarly, the daily 61.8% fib level is at 1.1319, expected to provide resistance.

The pound is closing the week on a strong note, appreciating beyond 1% on the day, favored by a broad based US dollar weakness amid a positive market mood. The pair has extended its rebound from 1.1150 lows on Thursday, to hit session highs past 1.1300, trimming losses following a sharp sell-off over the previous four days.

Non-Farm employment has increased above expectations in October with a 261K reading, beating the 200K consensus and showing that the US labor market remains in good health. Furthermore, September’s data have been revised to a 315K increment from the 264K previously estimated.

The unemployment rate, however, has increased to 3.7% from 3.5% in September, and the hourly wages have slowed down to 4.7% from 5%. These figures suggest that the tightness of the labor market might be starting to moderate, which has eased expectations of more aggressive tightening by the Federal Reserve, thus increasing downward pressure on the USD.

The greenback had rallied over the previous sessions following the hawkish comments by Fed President Powell, who reiterated the need for further monetary tightening after the bank’s monetary policy decision.

On the other end, the pound has been on the defensive over the previous days and particularly weak following the dovish hike by the Bank of England on Thursday. The bank hiked rates by 0.75% as expected, but BoE President Bailey signaled to a softer tightening pace over the next months, which accelerated the pound’s sell-off.

FX analysts at HSBC are skeptical about the sustainability of the current pound rally and see the pair resuming the downtrend soon: “The BoE noted that, although further rate hikes would be required, this would ultimately mean going ‘to a peak lower than priced into financial market’. This is in direct contrast to the Fed which made the observation that guidance around the terminal rate would likely need to move higher (…) We see GBPUSD moving lower into year-end 2022, given this ongoing cyclical divergence between the US and UK economies and rate profiles.”

Technical Levels: Supports and Resistances

EURUSD currently trading at 1.1284 at the time of writing. Pair opened at 1.1164 and is trading with a change of 1.07 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.131, 50 SMA 1.1346, 100 SMA @ 1.1703 and 200 SMA @ 1.2325.

The previous day high was 1.1422 while the previous day low was 1.1152. The daily 38.2% Fib levels comes at 1.1255, expected to provide support. Similarly, the daily 61.8% fib level is at 1.1319, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.107, 1.0975, 1.0799
• Pivot resistance is noted at 1.134, 1.1517, 1.1611

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